E-procurement systems have made great strides in automating and streamlining the procurement process and have become increasingly popular in corporate America.
We took a closer look to see what advantages outsourcing some procurement activities to a procurement service provider might have over these systems.
E-procurement systems have made great strides in automating and streamlining the procurement process and have become increasingly popular in corporate America.
There are numerous advantages to e-procurement systems and they have made multiple vendor transactions easier. However, are these systems the end-all and be-all of procurement?
We took a closer look to see what advantages outsourcing some procurement activities to a procurement service provider might have over these systems.
1. E-procurement systems derive information from internal catalogs that often contain static products and pricing that is updated infrequently.
2. Vendors on e-procurement systems might have one-price-fits-all, which can be list pricing. Procurement service providers, on the other hand, can obtain wholesale pricing in their role as re-sellers and can pass on those discounts to you.
3. Procurement outsourcing companies have direct relationships with vendors and therefore they may be privy to information on vendor-unadvertised limited-time specials.
4. Experienced procurement service providers can negotiate discounts on volume purchases on a case by case basis when dealing directly with vendors.
5. E-procurement systems find the lowest pricing based on only those vendors that they list in their system. Procurement service providers who have experience dealing with certain commodities are able to locate those suppliers/distributors who are not always visible on these systems.
6. Real time inventory levels are not always accurate on electronic systems. Procurement service providers can directly verify if the vendor inventory levels are accurate. If there is a delay due to non-stock items, they are agile enough to switch the order to another vendor, and they can directly negotiate matching offers with vendors that do have stock.
7. There are certain to be discrepancies in orders due to mismatched part numbers, product descriptions, etc., that may not always be caught on e-procurement systems and/or these discrepancies might cause the order to be bounced off the system. The human element can analyze the discrepancies directly and quickly resolve the problem.
8. Of course there are some types of orders that e-procurement systems may not be set up to handle, i.e. custom orders, made to spec orders, replacements for discontinued items, etc., where skilled procurement specialists are better equipped to assist.
The bottom line is, there is certainly an important place for e-procurement systems in the corporate world. This is a trend that is gaining momentum due to the amount of time it saves on transactions.
The question, though, is who benefits most from use of these systems? There are many instances where, by the very nature of these systems, money is being "left on the table". There are additional savings hidden from view by e-procurement solutions and only uncovered by a good negotiating team that a procurement service provider can offer.
Can the human element still compete with e-procurement systems? Absolutely yes. The skill and agility of an experienced procurement team cannot be replaced by an automated online operation.
LORANGO’s Procurement service offers a highly skilled and dedicated team to perform Procurement functions quickly and inexpensively, and with the flexibility needed to meet the changing needs of any Procurement department.
Find out how TRIDENTCIRCLE can help you optimize your Procurement process by contacting us or by submitting your RFQ.